Jun 10, 2014 | News

New Process for Registration No-Action Relief for CPOs

Due to the rescission of Regulation 4.13(a)(4) which had provided exemption from registration to certain types of CPOs, the CFTCs Division of Swap Dealer and Intermediary Oversight has fielded an increase in requests for no-action relief for failure to register as a CPO if another person would serve as the registered CPO of the pool in lieu of the requesting CPO. In order to manage the increased volume, the process has been simplified in the form of a provided template for CPOs meeting certain criteria.

Through the new streamlined process, the CPO no action request must satisfy the following standards:

  • The Designated CPO must be registered as a CPO and the Delegating CPO must not be subject to a statutory disqualification.
  • The business purpose for Designated CPO and Delegating CPO being separate entities must not solely be for the purpose of avoiding registration
  • The Delegating CPO must have delegated to the Designated CPO in legally binding form, all of its investment management authority, must not participate in solicitation of pool participants, and must not manage any property with respect to the pool.
  • The Designated CPO must maintain the books and record of the Delegating CPO in compliance with Regulation 1.31.
  • If Delegating CPO and the Designated CPO are both non-U.S. citizens, then one CPO must control, be controlled by, or under common control by the other CPO
  • If

    a Delegating CPO is an Unaffiliated Board Member, as defined in the letter provided below, then the CPO must be subject to liability as a Board member in laws of the CPO under which it is established.

  • If a Delegating CPO is a non-natural person or the Delegating CPO is a natural person but not an Unaffiliated Board Member, a legally binding document must be executed so that they are in agreement to be jointly and severally liable for legal violations by the other in connection with the operations of the pool.

The Delegating CPO must submit a request for relief in the form within in the letter provided below. The request must include a statement from the Designated CPO that it has acknowledged being designated as the registered CPO for the pool.

The CFTC Letter No 14-69 along with the request form can be found by clicking here.